UK consumers sharply cut their spending amid cost of living crisis
British consumers sharply cut their spending in January as the cost of living crisis damaged household finances, retailers have warned, amid growing concern over the impact of high inflation on the economy.
The British Retail Consortium (BRC) said sales growth slowed last month despite retailers offering steep discounts in the January sales, with households reining in their spending in the face of soaring costs for energy, food and other basic essentials.
Total sales rose by 4.2% in January compared with a year earlier, down from December’s annual growth rate of 6.9%. The BRC said much of the rise was a result of high inflation pushing up the value of goods being sold, masking weaker sales volumes.
“As Christmas cheer subsided, retailers felt the January blues as sales growth slowed,” said Helen Dickinson, the chief executive of the BRC.
“Many retailers discounted heavily to entice consumer spend, and while there were bargains to be had in the January sales, retailers continue to be hit by lower margins and falling volumes. Own-brand ranges remain popular across food and non-food products, and big-ticket items are seeing customers trade down.”
The bleak consumer outlook was underlined on Monday with the news that all 170 of M&Co stores will close with the loss of 1,900 jobs after the Scottish retailer fell into administration before Christmas.
The clothing and homeware retailer’s brand has been bought by Peterborough-based AK Retail Holdings, the owner of the larger sizes brand Yours Clothing, Long Tall Sally and Bump It Up Maternity but the deal did not include M&Co’s physical stores.
The BRC said the coming months would be challenging for retailers and households, with inflation at the highest rates since the early 1980s and the economy on the brink of a prolonged recession. The annual rate of inflation fell back in December to 10.5%, down from a peak of just over 11% in October, although still remains at the highest level since 1982.
“Consumer confidence remains stubbornly low and looming rises in household bills and mortgages mean discretionary spending will remain weak,” Dickinson said.
Source: The Guardian